PACRA Assigns Initial Entity Ratings to EcoPack Limited

November 6, 2018 (MLN): Pakistan Credit Rating Agency (PACRA) has assigned initial entity ratings to EcoPack Limited, at ‘BBB+’ for long term and ‘A2’ for short term, with a ‘stable’ outlook forecast.

The Agency has issued a press release on the matter, stating that, “The ratings reflect the Company's established position in PET Preform and PET Bottle segments. EcoPack has experienced a rising top-line owing to significant demand growth in PET Preform segment and its increased share in revenues.”

The press release further added that, the ratings are dependent upon the Company's ability to continue on its growth momentum while improving its margins and capacity utilization. Deterioration in margins and/or coverages will have a negative impact on ratings.

Pakistan’s Polyethylene Terephthalate (PET) packaging sector mostly derives its demand from bottled water and carbonated beverage industry, while, pharmaceutical and edible oil sectors have become an upcoming demand driver.

To cater to this demand, introduction of different PET bottles sizes have become important drivers for the sector’s growth. Strong consumer demand for beverages and other products that use PET packaging remains pivotal to the overall packaging industry's growth.

“The industry primarily operates in two segments: PET Preforms and PET Bottles. PET Preform segment is experiencing volumetric growth. Whereas, PET Bottle segment enjoys better margins,” explained PACRA.

The beverage companies in the last few years have installed bottle manufacturing units themselves limiting the growth in bottles segment for the vendors and at the same time creating a strong demand for Preforms from the vendor industry, they added.

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